CPI, PPI, Next Week, Tariffs, Grocery Delivery, and who was James Leprino?
Much Ado About Something
There were two key things this week. The CPI and the PPI.
The Consumer Price Index
The CPI comes out monthly and is measured as both a monthly and an annual change, with and without food and energy costs included.
The ‘headline’ CPI (everything included and focused on by media headlines) was 0.2% and 2.7%, monthly and year-over-year.
Expectations were 0.2% and 2.8% respectively, with the monthly measurement down from last month's 0.3%.
The Core CPI – without fuel and food – was 0.3% and 3.1%, even with expectations, but higher than last month’s 0.2% and 2.9%.
It’s bad Bad News as it may cause the Fed not to lower rates.
Later this month, the Personal Consumption Expenditures index, or PCE, another measure of inflation, comes out.
The Producer Price Index was released a day later, and:
It came in at 0.9% and 3.3% for the monthly and annual measurements.
Last month, it was 0% and 2.3%. Wrong directions and also, bad Bad News.
Why? If the stuff that the producers, i.e. manufacturers and wholesalers, are paying for is going up, then it’s just a matter of time before that gets passed on to consumers.
The Core PPI came in at 0.6% and 2.8%, also higher than expectations and higher than the previous month.
It also shows that the increase in PPI may have been caused by increases in energy and food.
It’s still all more than the 2% inflation rate that the Fed is looking for.
Next Week – Now that you saw what happened last week, look for two things this week.
First, initial jobless claims: expectations are for 224,000, the same as the previous week. But first, some perspective.
Going back to the end of 2021, weekly jobless claims have been in the range of 189,000 to 259,000. The most recent high point was 250,000 in May.
Covid caused a peak jobless claim of 6,137,000 in April 2020, but that was a covid-caused deviation.
The Great Recession peaked at 609,000 weekly, but was very prolonged by comparison with multiple weeks of initial jobless claims over 500,000.
If the number is significantly higher than 224,000, it will be bad good news.
Bad for the newly unemployed, but good in the sense that it may move the Fed into dropping rates in September.
That’ll depend on the PCE index later this month.
Second, the U.S. Leading Economic Indicators comes out, with expectations of going down 0.1% after a drop the previous month of 0.3%.
If it drops more than expected, that’s bad bad news, and I don’t think Wall Street will cheer that.
Tariff and Taxes Tidbits – as of August 7…
Brazil – 50% - Brazilian coffee, tea, and spices will be going up
Canada – 35% on non-USMCA – U.S., Mexico, Canada Agreement - and another 10% on potash. FWIW, potash is a key fertilizer that helps crops thrive and increases yields of said crops.
EU, Japan, South Korea – 15%. Your LG appliances may cost a little bit more.
India – 50% - that impacts spices, rice, and pharmaceuticals.
Mexico – 25% on non-USMCA items. BTW, Avocados are part of the USMCA, so will NOT be subject to tariffs. So are a bunch of other items that the USMCA protects.
UK – 10%. OK. I’m not sure what we import from the UK other than words that substitute the letter ‘s’ for ‘z’, but I’m not sure you can tariff for language. I’ll need to organise my thoughts better. Sorry, I meant organize; that just cost me 10%.
Vietnam – 20%, and 40% on goods shipped through Vietnam, like items that gets to the US that is made in China but shipped through Vietnam.
Steel and Aluminum – 50%. Wow.
Last year, steel had a 25% tariff and aluminum had a 10% tariff.
And now you have talking points for your next mixer and/or client/prospect meeting. You’re welcome!
And feel free to splurge on the guacamole!
Grocery Delivery – Again
Let’s go down memory lane: Home Ice Company, Carnation Milk, Helms Bakeries… oops, I rewound that tape a bit too far. Maybe I should switch from 8mm to DVD.
How about Webvan, HomeGrocer and FreshDirect from the 2000s?
In 2025, Amazon is going to give it a go.
And the stock price of InstaCart fell. Amazon is the gorilla of pretty much any retail venture right now.
It’ll be interesting to see how they pack the tomatoes.
Who was James Leprino
You may see their delivery trucks on the freeway, and you have most certainly eaten their cheese.
Leprino Foods is the world’s largest producer of mozzarella.
Jim was born in November 1937 in Denver, Colorado, the youngest of five children.
His father, Mike, immigrated from Italy at the age of 16. Unable to read or write, Mike signed his name with an X.
Like many immigrants I have profiled over the years, that did not stop him from opening his own grocery store in 1950.
Not in New York, but in Denver, Colorado.
Young James helped the family out in the store and joined his dad in business when he graduated from high school in 1956.
His dad was also making cheese for his daughter’s ravioli business, which became a side business for the store. The cheese, not the ravioli.
In 1958, they had to close the store due to the incursion of larger grocery chains. Jim talked his father into making cheese full-time.
Jim had noticed that pizza was becoming the hottest thing, and he saw an opportunity.
They hired a Wisconsin cheesemaker and were soon selling 200 pounds of mozzarella a week in the Denver area.
And James was leading the charge at the age of 24.
When his dad died in 1972, Jim took over, and the company took off. He made a science of making cheese, including making whey, the by-product of cheese, profitable, supplying lactose and protein powder around the world.
Today, with over 5,500 employees and 18 facilities, the Leprino company produces 200,000 pounds of cheese per hour.
If you have ever had a Domino’s, Pizza Hut, or Papa John's pizza, you have had Leprino mozzarella.
An online post by a four-decade employee stated:
“In a world of complications, Jim made everything so simple and easy to understand…. Visiting with Jim reminded me of attending Sunday school. Simple answers to complicated problems based on kindness, honesty, and ethics.”
All from a corner neighborhood grocery store started in 1950.
Jim Leprino passed away on June 19 at the age of 87.
Next week, I’ll discuss Kiplinger's revised forecasts for year-end numbers, helping you plan for the end of the year and the start of 2026. Yes, you should already be planning for 2026. As a hint, they think inflation will be at 3.4% by year end. I don’t know what the number will be, but I don’t think it will be where the Fed wants it to be. And I don’t think rates will drop in September.
That said, the best defense is to have a plan in place, or pivot, just like Jim Leprino. For what it’s worth, click here for a very well-produced video on the history of Mike and Jim Leprino. It’s worth the watch.
Last week, we talked about focus, and one of my millennial readers suggested that for her generation, the mantra for staying the course is “Just keep swimming”, from Finding Nemo. A ‘Thank You’ to Brittany Murphy with Golden Sun Marketing for that suggestion.
Until next time, keep swimming, stay focused, and keep your nose to the grindstone.
